Cooperation between China and Laos is poised to grow in the wake of an upgraded China-ASEAN free trade agreement, a rail link between the two countries and a wealth of China-developed economic zones.
China and ASEAN, or the Association of Southeast Asian Nations, have announced they have all but concluded an upgrade to their existing free trade deal that's being dubbed ASEAN-China 3.0 Free Trade Agreement.
One of the countries that stands to benefit from the agreement is landlocked Laos.
At a China-Laos joint development zone on the outskirts of Vientiane, companies from nine countries including China are producing goods mostly for export.
The zone lies just seven kilometers from the freight terminal of the China-built railway which runs from Vientiane to Kunming in southwestern China.
As a less developed country, Laos' exports enjoy tariff breaks or waivers for more than three dozen countries.
The Lao-China Joint Investment company is the main operator of the Saysettha Comprehensive Development Zone in Vientiane.
"These preferential economic policies give enterprises which produce goods here benefits of tariff and quota exemptions for exports to the European and American markets," said Xiong Jun, general manager of the Lao-China Joint Venture Investment Co.
Companies from China produce garments and other goods in the zone.
"Chinese investment has been helping Lao economy a lot, particularly in the energy sector, hydropower, in transportation infrastructure, in agriculture, manufacturing. There are many Chinese companies in special economic zones, which produce a lot of manufactured products," said Mana Southichack, a Lao economist.
The opening of the China-Laos Railway in 2021 has spurred Chinese investment and several China-developed special economic zones are bringing tangible benefits.
"The large number of manufacturing enterprises in the park provide job opportunities for the Lao people and at the same time they also contribute tax revenue," said Xiong.
This year marks the 15th anniversary of the establishment of the China-Laos comprehensive strategic cooperative partnership.
Since the establishment of diplomatic ties in 1961, cooperation between the two countries has spanned multiple areas.
Bilateral relations were further enhanced in 2019 with the signing of an action plan to build the China-Laos community with a shared future.
According to the Chinese foreign ministry, China is now the largest investor in Laos. Bilateral trade hit a record high of 7.1 billion U.S. dollars in 2023.
And from January to June this year, bilateral trade reached over 4 billion U.S. dollars, rising by 31 percent year on year.
As a flagship project under the Belt and Road Initiative, the Laos section of the China-Laos Railway stretches for more than 400 kilometers from Boten in the north to the capital Vientiane in the south. The railway is also a part of Laos's strategy to convert itself from a landlocked country into a land-linked hub.
China-Laos cooperation set to expand following upgraded ASEAN deal
